Paytm’s Stock Plunge 10% on June 12: Here’s What Triggered the Drop:
Following a significant announcement from the Ministry of Finance that made it clear that there are no plans to apply the Merchant Discount Rate (MDR) to UPI transactions, shares of One 97 Communications Ltd., the parent company of Paytm, saw a precipitous 10% decline on June 12.
Paytm Share Price Movement : Opening Price: ₹913.05 (down 5% from previous close of ₹960.45)
Day’s Low: ₹864.40 (down 10%)
10 AM Price: ₹886 (down 7.80%)
Volume: Over 8.06 crore shares traded by 10 AM
Despite the stock trading above important longer-term moving averages (50-day, 100-day, and 200-day), but still below the 5-day average, this sharp decline represents Paytm’s third straight session of losses.
Why Did Paytm’s Stock Plunge 10% on June 12?
False media rumors that the government might reinstate MDR fees on UPI transactions caused the steep decline. On June 11, however, the Ministry of Finance swiftly denied these allegations, saying:
“All rumors and assertions that the MDR will be applied to UPI transactions are utterly untrue, unfounded, and deceptive. Our citizens experience unnecessary uncertainty, fear, and suspicion as a result of such sensation-generating and baseless rumors.
This clarification seemed to disappoint investors, many of whom had hoped the reintroduction of MDR would open up a new revenue stream for Paytm and other fintech companies.
What Is MDR and Why Does It Matter?
Banks and payment service providers charge merchants a fee known as the Merchant Discount Rate (MDR) in exchange for real-time digital payment processing. To encourage digital payments and boost the digital economy, the government currently waives MDR fees on UPI transactions.
The Payments Council of India had urged Prime Minister Modi to reinstate MDR charges in March 2025, suggesting a minimum MDR on RuPay debit card transactions and a 0.3% fee on large UPI transactions. Fintech companies were encouraged by this, but their hopes have since been dampened by the government’s denial.
UPI Usage Continues to Surge
Despite the setback for Paytm’s revenue prospects, UPI usage in India remains strong:
- May 2025 Transactions: 18.68 billion
- Total Value: ₹25.14 lakh crore (up from ₹23.95 lakh crore in April)
- YoY Growth: 33% in transaction volume
- Daily Averages (May): ₹81,106 crore in value and 602 million transactions
Conclusion
The market’s dissatisfaction with the government’s position on MDR is reflected in the 10% decline in Paytm’s stock on June 12. Even though UPI is still expanding quickly in India, fintech companies like Paytm may find it difficult to increase profitability due to the lack of MDR monetization.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Please consult a certified financial advisor before making investment decisions.